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What were they thinking?
How in the world could Trichet have publicly raised the notion of holding ECB rates steady in January in the midst of a rapidly contracting global economy? Combined with a panic rate hike back in July, the great Trichet is looking less than stellar as the new year gets underway. Lost credibility is being reflected in the EUR/USD rate as the pair tumbles to levels not seen since before Trichet made those comments in Mid-December.
Next support for the pair is at 1.3377, the 61.8% retracement of the 1.2548/1.4719 rally. EUR/USD opens in New York near the lows for the day, at 1.3560.
Ever seen a train wreck?
You may be about to if Asia sticks to its export-driven ways, writes Ambrose Evans-Pritchard
Obama setting expectations low
UK Bank Bailout II: The Sequel
The first capital injection into the UK banks has failed to pay immediate dividends so it looks as though 11 Downing Street will order up another, according to the UK press.
ECB ends rate cut speculation
The 2009 outlook has already deteriorated beyond the ECB’s December forecasts and the Bank still has room to cut, says influential permanent board member Papademos. Look for a 50 basis point cut on January 15.
Anticipation of that cut should keep EUR/USD weighed down on shrinking interest rate differentials and a loss of credibility for the ECB. They are beginning to look as decisive as Hank Paulson by signaling a pause and then resumed rate cuts all in the same month. Nice of Trichet to trot out Papademos to take that bullet for him.
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